Ratings house backs direct ASIC fund monitoring

Research and ratings house, SQM Research has backed proposals for the Australian Securities and Investments Commission to be resourced to monitor all investment fund performance directly.

Such arrangements would place a greater obligation on fund managers to provide accurate and timely data.

ASIC’s Report 823 actually recommends that wholesale fund operators be held to the same regulatory requirements as their retail counterparts in terms of not only being required to inform ASIC of the operation of wholesale funds but to provide recurrent data on those funds.

Amid allegations about fraudulent reporting around the Shield and First Guardian collapses, SQM Research founder and managing director, Louis Christopher said he welcomed ASIC release of reports 820 and 823 on capital markets.

“The reports are very comprehensive and insightful. And we are thankful we were able to make our contribution towards the findings earlier in the year,” Christopher said. “We are strong advocates for all of ASIC’s recommendations, particularly surrounding private markets.”

“Moreso we strongly believe ASIC should be given the appropriate legislation and resourcing to monitor all fund performance directly. Doing so would bring our regulator in line with world’s best practice and would go a long way to minimising the risks of another Shield/First Guardian disaster in future,” he said.

“As ASIC have noted, research houses are indeed highly reliant on the documentation and representations fund managers provide when assessing their investment products,” Christopher said.

He said the existing situation around data was not something ratings houses had actually chosen.

“It’s just that for many metrics, the fund manager is indeed the sole source of such information. For example, information on fund loan arrears can only be sourced from the manger concerned at this time.”